Mr. Smith

Website / Online Mechandising / SEO

Search Engineers: Benefits of Travel Search

By Donald R. Smith, Executive Vice President, Nor1 Inc.

In the 1990s, the growth of online travel sites changed the playing field forever. Over the past decade, hotel marketers were forced to rely on OTAs (online travel agencies) for the bulk of their online bookings. This proved to be a costly channel offering little control over pricing, positioning, inventory management, and yield management.

While most hotel companies had their own Website by the turn of the century, it was not until 2002 that the majority initiated marketing efforts to drive consumers to their Websites. They used best rate guarantee as a carrot and then started purchasing key words on the search engines to drive additional consumers to their sites.

Today, hoteliers with varying Internet experience may certainly attempt to dabble in SEO (search engine optimization) and SEM (search engine marketing) on their own to increase bookings, but both have costs associated with them. The former does not have a participation cost, but there is still a labor cost associated with the marketing executive hired to manage the program. SEM, on the other hand, can be an expensive and risky venture, and one best managed by an individual well-versed in the metrics and methods. This person should also devote several hours a week - if not daily - on the management of purchasing the keywords from companies such as Yahoo!, MSN, and Google. A positive ROI must be maintained to keep a program like this ongoing. Costs can outweigh benefits if the marketer is not careful.

According to Forrester Research, more than 25 percent of online leisure air travelers researched travel from general search engines like Google in 2006. If a hotel or hotel group decides to market with a search engine by purchasing keywords, it should assume that they are likely competing against major agencies and consolidators for those same keywords, and that only a small percentage of general search engine users will actually reserve a hotel room. In fact, many users will click on the keywords purchased as they research a destination, not having any immediate plans to travel to the locale. For these reasons, hoteliers and hotel group should make it a priority to understand other options available to them - in particular, travel search.

Description of New Options

Travel search is also known as "vertical search" or "metasearch". This technology enables consumers to search and compare travel products from a comprehensive range of partners that include intermediaries like the OTAs and supplier-direct companies (Hilton.com, jetBlue.com). Players in this emerging travel space include the founder of travel search, SideStep, with their initial launch of its downloadable toolbar application in 2000 and the Web site in 2005. Soon after, Mobissimo, Kayak and finally Yahoo! FareChase launched competing Web sites. Alongside the US players that have entered the market, Europe also offers a couple of players in this space, such as Travel Supermarket and Kelkoo.

These sites are becoming increasingly more popular with consumers because they create efficiency within the travel search process, offering the ability to search multiple sites at once with a higher level of accuracy. No longer was there a need to open multiple browser widows in an attempt to compare itineraries and prices. Airlines, hotel groups, and car rental companies quickly embraced the new technology as it afforded them the opportunity to pull customers directly onto their own Web sites, helping build brand equity and loyalty while reducing distribution costs.

This model aligned well with the supplier's recent strategy to shift market share to their direct channels. Consumers benefit with time and cost savings, but they also obtain access to additional travel suppliers like jetBlue, which were not available on the major travel portals.

Travel search has been in existence for less than a decade, but it is already on its second reincarnation and has been a leader in creating some of the new applications referred to as "Travel 2.0." New technologies such as Ajax and user-based content have been introduced, allowing travel search sites to offer the ability to refine results from a search in seconds. Maps on these sites have also been enhanced by Ajax, allowing users to expand on their query without having to start a new one.

Supplier Concerns on Travel Search

Travel suppliers initially expressed some concerns with travel search, including commoditization of the product, demands on IT structure and lack of customer support.

The commoditization concerns quickly dissipated as travel search engines enhanced their sites to show the value of a property with rich content including photos, videos, and travel reviews, as well as side-by-side comparisons of amenities, prices, taxes and fees, in an unbiased nature. Once at the hotel's site, consumers have the option to upgrade to any of the room types displayed, instead of the one rate that a consolidator may offer. Travel search users are not only looking for the lowest rate, they also want control and comprehensiveness.

IT concerns are addressed by using intelligent search to only query the partner's sites when a consumer is actively looking for a hotel in a particular destination. The travel search companies utilize their databases to only query vendors with appropriate product for the consumer's search. Since search traffic has increased over the past few years, hotel chains are dedicating additional servers to meet the increased searches and bookings.

Unlike major OTAs, travel search companies do not operate call centers. Since the booking takes place on the supplier's site, the reservation is immediately in their system and the suppliers can provide customer support according to its own brand standards. This is great for the consumer, as the supplier can handle any issues about the reservation rather than directing them back to a travel agency or travel search site to fix their problems.

How Hotels Benefit from Travel Search

Travel search's top benefits for hotels and hotel groups are:

Control of pricing - The rates are the same as posted on the hotel's Web site, giving the hotelier has complete control of inventory and rates, and allowing for total yield management.

Ownership of the customer - The booking takes place on the hotel's branded site, thus they have ownership of the customer from the time of booking, creating the opportunities for an up-sell of a room category in addition to marketing the dining and recreational options prior to arrival.

Create brand awareness - Once the user is handed off to the hotel's Web site, they start their brand experience. Hotel staff can immediately enroll guests in their frequent stay program to build brand loyalty and acquaint the new guest to the other hotels within the group.

Lower distribution cost - Unlike some of the high margins enjoyed by the OTAs and other consolidators, the travel search companies operate at a much lower overhead, enabling them to either charge a basic commission or low pay-per-click rates.

Conclusion

With the travel search sector doubling its user base each year, this relatively new form of distribution is gaining momentum and taking a huge bite out of the major online agencies' market share. This sector, combined, represents a greater amount of bookings than any one of the large online agencies. This growth may be attributed to these travel search companies' focus on providing the best online experience for travel research and booking, resulting in customer satisfaction and return visits.

Don Smith develops strategic supply partners and creates revenue opportunities through innovative processes and related modules. He oversees implementation of Nor 1’s suite of revenue enhancement products. Prior to Nor 1, Mr. Smith headed up Business Development at SideStep. He positioned the company for a successful sale to Kayak Software in 2007. He currently holds leadership roles in industry associations, such as the American Hotel & Lodging Association (AHLA) and the Hotel Electronic Distribution Network Association (HEDNA). Mr. Smith can be contacted at 408-996-7417 or don.smith@nor1.com Extended Bio...

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